As a consequence, brand new discount enjoy down inflation and higher jobless, depicted because of the movement away from part A time B on the right-give chart

The leftward shift of the Aggregate Demand curve decreases the price level and output, moving the short-run equilibrium to point B in the left-hand chart. In the long run, the Aggregate Supply curve shifts to the left in the left-hand chart as wages decline in response to the excess unemployment.Continue reading→